According to a U.N. 2015 study led by the Economic Commission for Latin America and the Caribbean, Cuba's services sector is responsible for the growth in the Cuban economy, representing roughly 70 percent of gross domestic product. Tourism in particular has and continues to provide significant revenue to Havana, contributing $2.5 billion, or roughly 3 percent of GDP.
Furthermore, Cubans and Cuban-Americans have sent approximately $2 billion worth of remittances in the past year. The revenue is expected to grow within the coming years as well, ever since the U.S. Treasury Office of Foreign Assets Control raised the limit of remittance exports from $500 to $2,000 per quarter. U.S. citizens are now authorized to import $400 worth of Cuban goods, which will boost Cuba's domestic market sales. As a result, the Cuban economy is forecast to grow on average more than 4 percent between 2016 and 2020.
Unfortunately for Cuba, the U.S. trade embargo and the restrictions it places on economic growth remain. For all the benefits tourism and remittances provide, Cuba's economy still heavily depends on these revenues, with no alternatives to diversify the economy because of the embargo. Because of this, Cuba will continue to be dependent on Venezuelan aid and fuel subsidies, a situation made more precarious by the results of Venezuela's Dec. 6 legislative elections. The opposition-led National Assembly can now call a referendum on Venezuela's international treaties that are deemed to compromise its national sovereignty, specifically its controversial treaties with Cuba.
The embargo on Cuba will define the state of its economy in 2016, and unfortunately for Cuba, chances that the United States will lift restrictions are slim. With congressional and presidential elections approaching in 2016, domestic politics will limit U.S. politicians' and lawmakers' ability to cooperate in lifting the embargo. Thus, despite the thaw in U.S.-Cuba relations in 2015, it is unlikely that the United States will lift its embargo in 2016. It will be a more difficult year for Cuba as it becomes more dependent on tourism, remittance revenues and Venezuelan oil subsidies, all while remaining economically isolated.
